he landscape of the self-storage industry is rapidly evolving, and at the forefront of this evolution is artificial intelligence (AI). AI is not a looming future prospect but a present reality reshaping industries worldwide. In the self-storage sector, the adoption of AI is crucial for staying competitive. This article delves into the imperative of embracing AI, not out of fear but as a strategic tool to gain a competitive edge. We will explore why AI integration is essential, how it’s changing the industry, and provide a step-by-step action checklist for self-storage businesses to start their AI journey.

One common fear is that AI will lead to job losses. While AI does automate certain tasks, it primarily functions to augment the capabilities of human workers, allowing them to focus on more strategic and creative tasks. Another concern is the perceived complexity of implementing AI. However, the self­storage industry already has access to numerous turnkey AI solutions that are easy to integrate and use, without the need for extensive technical expertise.

There’s also apprehension around the cost of AI integration. While initial investments may be required, the long-term ROI of AI, in terms of increased efficiency, higher customer satisfaction, and enhanced revenue opportunities, often outweighs the initial costs.

Furthermore, AI is not about creating a robotic, impersonal customer experience. On the contrary, AI can enable a more personalized, responsive service by quickly processing customer data and providing tailored solutions. It can anticipate customer needs and offer personalized recommendations, enhancing the customer experience.

Finally, there is a fear of the unknown, a hesitation to step into new technological territories. Embracing AI requires a mindset shift, viewing it as an evolving journey rather than a fixed destination. It’s about starting small, experimenting, and learning as you go, building confidence in the technology’s capabilities and its potential to transform your business operations.

1. Educate and acquaint yourself with AI.

   Begin by expanding your knowledge about AI. Engage with online courses, webinars, and industry­specific literature focusing on AI applications in self-storage. Understanding AI’s basics, like machine learning, data analytics, and automation, will provide a solid foundation to envision its practical applications in your business.

2. Evaluate your needs and set goals.

   Conduct an assessment of your facility’s operations to identify areas where AI could bring improvements. Consider aspects such as customer service, security, pricing strategy, and facility management. Set clear, achievable goals for what you want AI to accomplish, whether it’s increasing rental rates, improving customer satisfaction, or reducing operational costs.

3. Explore AI tools and solutions.

   Research AI tools and solutions relevant to the self-storage industry. Look for AI-powered software for facility management, AI chatbots for customer service, and AI-based security systems. Attend industry trade shows, consult with AI vendors, and seek advice from peers who have already implemented AI.

4. Start small and experiment.

   Begin your AI journey with a small-scale project. For instance, implement an AI chatbot on your website to handle customer queries. This approach allows you to measure the effectiveness and impact of AI on your operations without overwhelming your team or budget.

5. Train your team.

   Ensure your staff is comfortable and familiar with AI tools. Conduct training sessions to help them understand how AI works and its benefits. This step is crucial for smooth implementation and adoption. Employee buy-in can significantly influence the success of integrating new technology.

6. Measure and Analyze Results.

   After implementing AI solutions, continuously monitor their performance. Use metrics and data analytics to evaluate their impact on your business goals. This analysis will help you understand the ROI of your AI investments and identify areas for improvement.

7. Scale up and integrate further.

   Based on the results and learnings from initial implementations, gradually expand AI integration into other areas of your business. For instance, after witnessing the success of an AI chatbot, consider integrating AI into your facility’s security systems or operational management.

Moreover, the adoption of AI lays the foundation for sustainable growth. It equips self-storage operators with the tools to respond swiftly to market changes, anticipate customer needs, and streamline operations, thereby reducing costs and increasing profitability. AI’s ability to analyze trends and predict future market dynamics means that self-storage facilities can plan and adapt in ways that were previously impossible.

In an industry where competition is intensifying, and customer expectations are continuously evolving, standing still is not an option. AI offers an opportunity to stay ahead, to be innovative, and to redefine what is possible in the self­storage industry. It’s a journey towards not just embracing change but leading it.

As we look to the future, the role of AI in the self-storage industry is only set to grow, bringing new opportunities and challenges. For self-storage businesses, the time to embark on this AI journey is now. Those who seize this opportunity will be the ones shaping the future of the industry, thriving in an increasingly digital and AI-driven world. The era of AI in self-storage is here, and it promises a landscape rich with opportunities for those ready to embrace its potential.

was a year filled with memorable firsts in the United States. The first federal Martin Luther King Jr. Day was observed. Voyager 2 was the first spacecraft to explore Uranus. IBM created the first laptop computer, known as the PC Convertible. The Rock and Roll Hall of Fame inducted its first group of musicians (Chuck Berry, James Brown, Ray Charles, Fats Domino, Sam Cooke, The Everly Brothers, Buddy Holly, Jerry Lee Lewis, Elvis Presley, and Little Richard). About 6.5 million Americans linked together to form the first (and only) human chain to stretch across the country through Hands Across America. Twenty-year-old Mike Tyson won his first world boxing title and became the youngest heavyweight champion ever. Mike Parham founded his first business, National Development Services, the construction company that would later be known as NDS Construction. And he and his wife, Ann Parham, welcomed their first child, Rachel Parham.

Some of her earliest memories of the family business include making forts under her father’s huge office desk with her two younger siblings and going on “field trips” to job sites, where she’d don a hardhat as an honorary member of the construction crew.

“I was always by his side, hanging onto every word he said. He treated me like his intern, and he was such a great teacher,” Rachel says about her father, Mike, whom she describes as a true family man. “He was loving and always wanted us around.”

As a matter of fact, he’d oftentimes find ways to transform his business trips into family vacations. “We’d shop stores during vacations and visit job sites. He saw every situation as an opportunity to learn and have fun. He was a highly intelligent man,” she recalls, adding that they frequently visited Walt Disney World in Florida before or after looking at potential development sites and/or checking on their portfolio of Noah’s Ark Self Storage facilities in the Sunshine State. Rachel also accompanied her dad on business trips in Colorado, enjoying father-daughter time in the great outdoors around self-storage property visits.

“I’m happy to have had a background in self-storage,” Rachel says. “I learned a lot about responsibilities, work ethic, and values from my parents.”

Following her high school graduation, Rachel attended Texas A&M University in College Station, Texas—about three hours away from the company’s Bulverde-based headquarters. After consideration of her acceptance to Georgetown University, recognizing that she’d be an exceptional litigator, ultimately, her dislike for reading lengthy contracts pushed her to reconsider how she’d eventually use her degrees (a Bachelor of Science degree in renewable natural resources with a minor in rangeland ecology and management, a Bachelor of Arts degree in political science with an emphasis in foreign securities, and a graduate certificate from Texas A&M’s Bush School of Government and Public Service).

In 2008 and 2009, Rachel was awarded a scholarship with Texas A&M University’s Public Policy Internship Program and Agricultural & Natural Resources Policy Internship Program. This afforded her the opportunities to work in Washington, D.C., for the Department of Justice Office of Legislative Affairs and the House of Representatives Texas 21^st Congressional District under Congressman Lamar Smith’s office. Upon completion of these programs, Rachel continued her stint in D.C., working for the Drug Enforcement Administration Congressional and Public Affairs Office.

Then, in 2012, Rachel was in between jobs and considering moving back to Washington, D.C., to accept a position with the Defense Intelligence Agency, when Mike called and offered her a position at Noah’s Ark Development. She started as a development consultant, but it wasn’t long before she was promoted to president of development. Approximately two short years after joining the team, Rachel stepped into the role of president of Noah’s Ark Development following Mike’s untimely passing on Nov. 18, 2014.

“I feel blessed that I had the opportunity to work alongside him in a more professional capacity, even though it was shorter than I ever imagined. He entrusted me in the development of multi-million-dollar projects with minimal oversight. It was an honor to collaborate with the person who taught me everything I know about this business and my contributions be highly valued,” she says.

In addition to fostering her love for nature and fly fishing through camping trips, she says Mike passed his passion for self-storage development onto her and taught her by example how to always give 100 percent.

“I’m the female version of him,” says Rachel, who mentions that her mother, Ann, CEO and president of the Parham Group, often claims it’s like “déjà vu” watching her daughter because Rachel’s work ethic and mannerisms are so similar to those of her late husband.

Rachel recognizes that Ann is the glue holding everything together. “My father would often credit our family’s success to my mother, knowing that none of this would be possible without her. I am so grateful that she supported me and the business after his passing. She’s the strongest woman I know, and I’m proud to be her daughter.”

Now, Rachel continues to follow in her parents’ footsteps, forging ahead with great plans to augment the family business with additional kinds of real estate developments, such as office/warehouse—an option she knows would be a “good sister to self-storage” since it uses the same building materials and same development process.

“I live by the thought that I can do anything I put my mind to,” says Rachel. It’s a belief that her parents instilled in her that’s given her the confidence to overcome various obstacles in the development process and forge innovative ideas/methods to compete and adapt in an ever-changing economy.

In order to grow and adapt, Rachel emphasizes the necessity to build new relationships with investors, residential and commercial developers across the country, and general contractors outside the self-storage sector. She’s also put ample effort into establishing and strengthening partnerships with various industry vendors, including Janus International, whose Nokē^® Smart Entry access control system enables them to remotely manage smaller sites within rural and secondary markets while simultaneously reducing operating expenses and providing customers with 24/7 access. Going forward, Rachel and her brother David, president of Joshua Management, plan to expand the Noah’s Ark Self Storage portfolio that would be owned and operated by the Parham Group. (Since the company’s inception, it has built and sold several self-storage portfolios, but many of the facilities Mike built in the 80s, 90s, and early 2000s are still standing, and Rachel still relishes passing by them in her travels throughout the United States.)

“Finding good people to work with is important,” she says, adding that “not all money is good money,” when it comes to taking jobs and/or making deals.

For those reasons, and countless others, Rachel is grateful to work alongside her mother and brother, as well as approximately 15 employees whom she says are all members of the extended Parham family.

“We are there from beginning to end with a project,” says Rachel. “That takes a lot out of you, but having a good team and support helps. I’m surrounded by intelligent, motivated people who like to problem solve. It’s a fun dynamic with people from different generations.”

She goes on to say that they “come together and get through any storm”—an all-hands-on-deck approach that strengthens bonds, builds character, and provides both teachable moments and learning opportunities for the entire team.

“I try to guide people,” Rachel says about co-workers and clients alike. “I don’t want to see any one fail.”

Like her father, she believes that “an educated industry is a successful, smart industry,” which is why she attends storage-specific conferences and emphasizes the company’s “Go/No-Go Process”—a five-step process that has helped ensure the development success of over 10 million net rentable square feet across the country. Taking a project from concept to completion is Noah’s Ark Developments specialty. In the “Pre-Development phase” Rachel and her team utilize the “Go/No-Go Process” to determine a market’s demand for self-storage. They research the market to identify the prospective client base and design a facility/unit mix based on the market’s needs and culture to ensure success in any economic climate. “This is the most important phase of the development process. The Go/No-Go Process determines the demand and feasibility of a project. By utilizing the experience of all three Parham Group companies, we help developers save time and money to determine if a project should move forward.”

Since taking the reins of Noah’s Ark Development and NDS Construction, she has personally overseen the development/construction of 25 self-storage facilities (third party and Noah’s Ark Self Storage), consulted as an owner representative for numerous third-party ventures, and handled the sale of two Noah’s Ark Self Storage portfolios.

Above all, she finds pouring her “blood, sweat, and tears” into her work to be genuinely fulfilling.

“There is nothing like building from the ground up,” Rachel says. “It’s the most rewarding feeling in the world!”

ast January, the prime interest rate was 7.5 percent—more than double the abnormally low rate of 3.25 percent that Americans had enjoyed throughout 2021 and 2022. By mid-2023, the prime rate had increased to 8.5 percent, where it remains today.

Although the Federal Reserve has indicated that it will start cutting interest rates around mid-year 2024, the cuts (at least three of them are lined up) will be slow and gradual. So, what does this mean for investors, developers, and operators who are still eager to grow their self-storage portfolios?

To provide insight into the investment arena, Modern Storage Media spoke with Drew Hoeven, chairman and chief investment officer (CIO) of Newport Beach, Calif.-based Westport Properties, Inc., a multi-vertical real estate investment and management company with many high-profile and respected institutional and private investors that has been in the self-storage industry for more than 35 years.

His predictions align with the interest rate projections made by some financial institutions within the United States. For instance, Comerica Incorporated, a financial services company headquartered in Dallas, Texas, expects an initial rate cut of 25 basis points to occur in June, followed by “a cumulative 0.75 percentage point in rate cuts over the course of 2024.”

And despite uncertainties surrounding the upcoming presidential election, interest rate movements during election years have not been measurably different from non-election years. (According to historic data, rates have increased 10 times and decreased seven times during election years since 1955.) “I do not think the presidential election will alter the transactional market for self-storage,” says Hoeven. “However, I’m hopeful housing transactions will tick up due to interest rates declining and therefore improving our operational metrics.”

Although amused by the proposed link between leap year and economic slumps, Hoeven isn’t overly concerned. “I’m not sensing a recession is coming,” he says. “Our CFO, Scott Nguyen, reminds me that recessions only happen if the Philadelphia Phillies win the World Series. Thankfully they lost in ‘22 and just missed making it to the series last year.”

As they patiently wait for the tide to turn, they continue to comb through the market for acquisition opportunities with value. “We’re constantly looking at deals and making offers,” he says. “We look at everything, but mostly in MSAs where we have a presence.” Properties owned and managed by Westport Properties are operated under its US Storage Centers brand and located in 19 states.

Hoeven notes that while Westport Properties looked at a large number of sites and portfolios, they only closed on one deal in 2023, losing some potential acquisitions to more aggressive bidders, but they did add 38 management contracts to its portfolio.

Indeed, the company’s strategy of patience paid off last year, and Westport Properties was able to expand its portfolio regardless of the harsh economic climate. Per data presented in Messenger’s annual Top Operator’s list, Westport also climbed up four places in 2023, from No. 18 in 2022 to No. 14. In total, Westport owns and/or manages 224 self-storage facilities and approximately 15.5 million net rentable square feet of storage space.

When it comes to new development, Hoeven has a “contrarian outlook” because it’s a “lengthy process,” with a “five- to seven-year horizon to stabilization.” This is especially true in California, where there are stringent development regulations and strict building codes. “The last development we completed was in late ’21. We couldn’t get comfortable with land pricing the last several years,” he says. “We’re currently processing entitlements on one site and have several we are actively underwriting or negotiating on.” Nevertheless, the company does keep an eye out for viable land.

“You need expertise to get through the hair and patient capital,” Hoeven says, adding that Westport is blessed to have great capital partners. “We also have a great, stable legacy portfolio that gives us the ability to make smarter decisions and not chase fees.”

“Learn from the past,” Hoeven says, citing “poor underwriting” based on the record highs of the pandemic as one of the reasons new self-storage developments are failing to meet their proformas. That poor underwriting includes exaggerated rent outlooks and overly optimistic lease-up times. Therefore, he reminds investors to “be realistic” going forward.

To those wanting to build substantial portfolios at breakneck speed, he says, “Don’t do deals just to get the fees. One good deal is better than 15 bad deals.”

Hoeven has one final suggestion for investors: “Be strategic about the capital stack, but don’t get greedy.” The latter half of that advice could easily apply to sellers, too, as there’s been some chatter throughout the industry about a disconnect between buyers’ and sellers’ expectations stemming from cap rates. Capital and valuations haven’t been matching up either, but he thinks “values will be cemented” this year and the sector will start transacting again. And when things eventually loosen up, Hoeven’s guidance may help you glide out of the starting gate with ease!

he start of a new year signifies a time of reflection and an opportunity to plan for the future. It is an ideal time to assess what went well and determine how to achieve business goals in the new year.

Using intentional and targeted planning to address each trend will allow owners to recognize and regulate their response to business planning in 2024.

When considering the goals of the business, ask the following questions:

• What work needs to be done to attain the business goals?
• How many people are needed to achieve the business goals?
• What are the skills necessary to fulfill the business goals?

When considering the current staff, ask the following questions:

• Can the current staff support the work that needs to be done?
• Does the current staff have the skills to accomplish the business goals?
• Can the current staff support the business goals and still provide customers with a positive experience?

Start by determining the goals of the business:

• Is there a plan to develop, acquire, or expand?
• Of the current staff, who can help the business meet the goals?
• How many additional staff members would be required to meet the goals?
• What staffing changes could occur in 2024 that would impact the goals?

When assessing the current staff, pay attention to low performers and those who may incur a life change, as both can impact turnover rates and leave owners with a staffing deficit.

Once the business goals have been identified and consideration given for the current staff, the two are combined to develop a staffing plan. Successfully planning for staffing changes requires the collection trend analysis data. This can be overwhelming for business owners, specifically when sourcing and interpreting the data. Many storage owners have turned to management companies to collect and analyze the data and manage staffing for the business. Management companies specialize in understanding the trends and developing a proactive approach versus reacting after the fact. They can track hiring/retiring patterns, turnover, and market demographics, thereby taking the burden off the owners.

While reviewing the financials from the previous year, ask the following questions:

• Was the business profitable?
• What can be improved?
• Are there any outliers in the financial reports?

If the business was profitable, continue the analysis to include operational efficiency. This occurs when individual line items are evaluated for return on investment. Consider whether sales can be maintained or increased; with fewer overhead costs, profits will rise. Owners should critically look at each expense to determine its overall impact on revenue. Further, they should distinguish where money should be allocated for the highest return on investment.

This process is referred to as revenue management. Budgeting, rate increases, promotions, payroll, and all other line items are studied to make the best fiscal decision and manage revenue. The process can be complex, especially after a turbulent fiscal year, and with the continued unrest in both the macro and micro economy, forecasting can be difficult. Owners who choose to work with a management company can take advantage of “business intelligence.”

Business intelligence uses data from multiple properties and then compares the results to a larger portfolio. It utilizes trend identification technology and proactively adjusts to the market. When choosing a management company, look for one with a large enough portfolio to identify trends, yet small enough to directly work with owners. This allows owners to enjoy the benefits of business intelligence without being just another number.

Secondary and tertiary markets are expected to welcome new residents who are trying to avoid the higher expenses seen in urban markets. These newcomers will rely on the internet to guide their move and make financial decisions. Over 90 percent of people currently use the internet to perform research on how to spend their money. Close to 80 percent of people will follow through with their purchase. This alone makes the case for having a strong digital presence. No business owner can afford to miss out on 80 percent of their customers.

Some owners have opted to pool resources to develop a less expensive web presence. Although cost effective, the drawback is seen during internet searches. It is true that some digital presence is better than no digital presence, but value is realized in the generation of new business. Using a management company that provides brand recognition, online advertising, and a strong digital presence lets owners compete against large national brands. Simply put, the customer needs to know the business exists before they can rent a unit; therefore, the more visible the business is online, the greater the likelihood of obtaining new customers.

Now is the time to plan for success in 2024. Capitalize on the predicted trends for the new year, explore the advantages of working with a management company, and find ways to attract new customers.

he self-storage sector’s 3Q 2023 performance, by and large, beat expectations. All four REITs reported positive same-store revenue of 1.95 percent (non-weighted) and the sector remained positive for same-store NOI at a non-weighted 1.25 percent. Quarter-end average occupancy of 91.5 percent (non-weighted) demonstrates the return to a pre-pandemic operating environment, as 3Q 2019 non-weighted quarter-end occupancy was just 2 bps ahead of 2023 at 91.7 percent. 3Q 2019 NOI growth of 1.62 percent is constructive context as well, as it corroborates the view that the self-storage industry has returned to a pre-pandemic operating setting.

avigating the world of self-storage investing can be an adventure. To find success, you need to know your way around financing. In this article, we’ll learn more about the capital stack. It’s a tool that all savvy self-storage investors need to understand. Like building a tower with various blocks, each part of the capital stack has a role in creating a strong investment. We’ll start with the solid ground of senior debt and climb to the heights of common equity. Our goal is to give you clear, simple insights so you can make smart choices in your investments. Let’s explore these financing layers together and set you up for a successful journey as self-storage investors.

Imagine you’re building a big, strong tower out of blocks. In the world of self-storage investing, senior debt is like the first layer of blocks. It’s essential because it forms the base of your investment tower. Just like you’d want the bottom blocks to be strong and steady, senior debt gives your investment that solid foundation.

So, what exactly is senior debt? Think of it as a particular loan that self-storage investors use. When investors want to buy or improve a self-storage facility, they often borrow money. Senior debt is the first loan they take, and it’s vital because it’s the safest. Why is it safe? Because if something goes wrong and the investor can’t pay back the money, the lender who gave the senior debt gets paid back before anyone else. It’s like being at the front of the line when it’s time to get your money back.

Self-storage investors like senior debt for a few reasons. First, it’s like having a solid foundation for your building; it gives your investment a steady base. This makes investors feel more secure because they know that the senior debt lenders are the first to get their money back if things don’t go as planned.

But, like everything in life, there are pros and cons. Here’s a quick list for self-storage investors:

1. Safety First: It’s the safest type of debt because it gets paid back first.
2. Steady Base: It provides a strong and secure foundation for your investment.
3. Lower Interest: Senior debt often has lower interest rates than other types of loans.

1. Strict Rules: The terms can be strict, and you have to follow them closely.
2. First Dibs on Assets: If you can’t pay it back, the lender has first rights to your self-storage facility.
3. Limited Flexibility: You might get less money than you would with other types of loans, so you have less wiggle room for other investments.

In summary, senior debt is like your investment tower’s trusted, strong base layer of blocks. It’s a favorite for self­-storage investors because it’s safe and secure, but it’s important to remember it comes with specific rules and limits. Like in a game of building blocks, choosing the right base sets you up for success.

Let’s continue with our building block tower analogy. If senior debt is the strong base layer, then mezzanine debt is like the middle layer of blocks in your investment tower. This layer is interesting because it mixes a bit of risk with some great opportunities.

So, what’s mezzanine debt? It’s a type of loan that comes after senior debt. Imagine you’re an investor in self-storage and already have your base layer (senior debt) set. Now, you want to add more blocks (or money) to make your tower (investment) bigger. This is where mezzanine debt comes in. It’s like a booster that helps you grow without giving away too much of your tower to others.

Why do self-storage investors use mezzanine debt? Sometimes they need more money than what they got from senior debt, but they don’t want to give away parts of their investment (or equity) to get it. Mezzanine debt is a smart choice because it’s a way to get that extra money without losing too much control of their self-storage investment.

However, there’s a balance of good and not-so-good points to consider. Here’s a quick list for self-storage investors:

1. More Money: It lets you borrow more, which can mean a larger investment.
2. Keep Control: You don’t have to give away as much ownership as you would with equity.
3. Bigger Returns: If your self-storage investment does well, you can make more money since you still own a big part of it.

1. Higher Risk: It’s riskier than senior debt. If things go wrong, you have to pay back senior debt first.
2. Higher Cost: Mezzanine debt usually comes with higher interest rates.
3. Complex Terms: The agreements can be more complicated than senior debt.

In short, mezzanine debt in self­storage investing is like the adventurous middle layer of your block tower. It’s for those who want to grow their investment and are OK with taking more risk. By using mezzanine debt, investors can add more to their investment without giving too much away, but they need to be mindful of the higher risks and costs involved. It’s all about balancing the risks and rewards to build your investment tower just right.

Continuing with our building block tower analogy, preferred equity is like a special set of blocks that fit just above the base (senior debt) and middle (mezzanine debt) layers. This part of your investment tower is unique because it’s flexible and offers impressive benefits.

So, what is preferred equity? It’s a mix between a loan and owning a part of the self-storage investment. Imagine you’re a self-storage investor and have your base and middle layers of blocks set up. Now you want to add some special blocks that give you a mix of safety and the chance to earn more if your investment does well. This is where preferred equity comes into play.

Preferred equity is excellent for investors who want a bit of both worlds: the safety of a loan and the chance to earn like an owner. It’s like having a VIP ticket that gives you some special perks. If the self-storage investment makes a lot of money, you get to share in those profits. Plus, if things get challenging, preferred equity is safer than regular equity because you get paid back before the common equity holders.

But, as always, there are pros and cons to think about. Here’s a quick list for self-storage investors:

1. Safety Plus Upside: You get a safer investment than regular equity but can still earn from the property’s success.
2. Priority in Payments: In case of financial hiccups, you get paid back before those with regular equity.
3. Flexible Terms: Preferred equity can have different terms, giving you more options.

1. Capped Earnings: Your share of profits might be limited, unlike regular equity.
2. Less Control: You might have less say in the property’s management than regular equity holders.
3. Risk Exists: While safer than regular equity, it’s still riskier than senior or mezzanine debt.

In essence, preferred equity in self-storage investing is like adding a smart, adaptable layer to your investment tower. It’s perfect for those who want safety and the opportunity to earn from the property’s success. With preferred equity, investors get some of the safety of debt and the profit potential of equity, making it a popular choice for those looking to diversify their investment strategy. It’s all about finding that sweet spot between risk and reward!

Let’s reach the top of our building block tower analogy with common equity. This is the topmost layer, like the peak of a mountain. Common equity is exciting and risky in the world of self-storage investing. It’s where the highest risks and the biggest rewards can be found.

So, what is common equity? It’s like owning a piece of your self-storage investment. When you put money into common equity, you’re not just lending money and getting it back with interest like senior or mezzanine debt. Instead, you own part of the self-storage facility. If the facility does well, you could make a lot of money. But it also means that you might lose what you put in if things don’t go well.

Self-storage investors who choose common equity are usually those who are willing to take big risks for the chance of big rewards. They’re like adventurers climbing to the top of a mountain, knowing that the journey is risky, but the view at the top can be breathtaking.

As with all investments, there are pros and cons to consider. Here’s a quick list for self-storage investors:

1. Big Rewards: If the self-storage does well, you can make more money.
2. Ownership Power: You get to have a say in how the self-storage facility is run.
3. Unlimited Potential: There’s no cap on how much money you can earn if the property is successful.

1. High Risk: You could lose your investment if the property doesn’t do well.
2. Last to Get Paid: In case of financial issues, common equity holders are the last to get any money back.
3. Long-Term Commitment: It might take a while before you see any returns on your investment.

In summary, common equity in self-storage investing is like standing at the peak of a mountain. It’s thrilling and offers the chance for substantial rewards, but the journey is risky and requires a strong appetite for high stakes. For adventurous and patient investors, common equity can be the ultimate investment choice, offering the potential for significant returns and a strong sense of ownership of the property.

Understanding the different levels of the capital stack is crucial for success in self-storage investing. Like building a tower with different types of blocks, each financing option offers unique benefits and risks. At the base, we have senior debt, offering stability and safety with lower risk but stricter terms. The middle layer, mezzanine debt, provides additional funding with higher risk and cost but allows for greater control and potential returns. Preferred equity comes next, blending the safety of debt and the rewards of equity, offering a safer option than common equity but with some limitations on earnings. At the top is common equity, the peak of potential rewards, where the risks are highest but so are the possibilities for substantial gains.

A mix of these financing types can create a balanced portfolio for many investors, reducing overall risk while maximizing profit opportunities. Staying informed and consulting with financial experts can help tailor your strategy to align with your goals and market conditions, ensuring a more effective and impactful investment journey.

At Self Storage Investing, our commitment is to arm you with the insights and tools needed to excel in this dynamic market. Whether you’re a veteran investor or just starting your journey, we’re here to support your path to self-storage investment success.

Stay informed, stay ahead, and achieve your self-storage goals.

self-storage loan is based upon two main items: you and your project. This article features several ways to best present them to the lenders.

It is important you do not open or close credit card accounts. Pay off all credit cards in full and on time, plus make sure you do not use more than 30 percent of your credit card capacity. If you approach the 30 percent threshold, make an early payment. If you have an online app to access your credit card info, it is easy to check your balance and make a payment. You can also check your credit score anytime and typically see how you are doing on those six items.

Below is an example of the six items noted above reported on an online Capital One account.

The cover letter is typically several pages long with an appendix. Don’t forget to include pictures such as a location map, building elevations, and floor plans.

Of course, if you are responsible for the carrying cost to breakeven, you must have a realistic breakeven period and have that cash available.

It would be best if you talked with several self-storage lenders, both locally and nationally. Ask how many self-storage loans they did in the past year and confirm they are looking to make self-storage loans. Ask them point blank how much you need to put down to get the best rates and ask about their current interest rate for good self-storage projects/clients.

Typically, traditional lenders do not let you borrow soft development costs and carrying costs. It is important to have this conversation occur up front, so you budget accordingly.

You want to use an SBA “preferred lender” because they typically have more experience and do not have to submit all applications to SBA for approval, which can delay your project. There are two types of SBA loans: SBA 7a and SBA 504. They each have different borrowing limits, required deposits, and different interest rates. Just as important, they have different rules and the ability to include carrying costs to breakeven.

To get the best interest rate and borrow carrying cost, you may need to take out both an SBA 7a loan and an SBA 504 loan. Not all banks provide both types of SBA loans. Even if they do, they may not provide both loans for a single project, so this must be discussed early on.

ow do you begin to say “thank you” to the men and women who have sustained some of the most severe injuries imaginable to protect and defend our way of life? These courageous warriors have sacrificed so much for the United States, and it is time that we show our appreciation by doing our part to help them rebuild their lives. That is what Homes For Our Troops (HFOT), now celebrating 20 years of service in 2024, is all about.

In 2023, several community leaders and Home For Our Troops supporters, including StorageGives, attended multiple HFOT events to support veteran Marine GySgt. Nicholas Beberniss. On July 21, 2004, then Lance Cpl. Nicholas Beberniss was serving in Al Anbar Province, Iraq, when a double-stacked anti-tank mine hit the vehicle he was riding in. Lance Cpl. Beberniss sustained broken ribs, a broken back, fractured pelvis, punctured lung, and severe damage to both legs in the blast.

Once transported back to the United States, Beberniss endured numerous surgeries to save his legs. Doctors eventually amputated his right leg below the knee. Once he recovered enough, Beberniss switched his specialty to small arms repairer to remain in the Marines. He became the first Marine to reenlist on Permanent Limited Duty and later finished his career on Expanded Limited Duty. Toward the end of his career, he noticed some physical changes, including difficulty walking, fatigue, paralysis, and double vision, and was diagnosed with Service-Connected Multiple Sclerosis, forcing him to medically retire in 2019 at the rank of Gunnery Sergeant.

The first event was the Community Kickoff, in which supporters and community leaders welcomed Beberniss and his family to the Casa Grande Community. The second event in 2023 was the volunteer day, where volunteers helped with the landscaping of Beberniss’ new home. Vendors, StorageGives, board members from the Arizona Self-Storage Association (AZSA), as well as their families, volunteered to help this effort. On her time volunteering, Amy Amideo, executive director of AZSA, says, “My experience with HFOT has been a wonderful experience from the top down. It’s a wonderful cause, and the organization does an incredible job executing these volunteer days. It is great to see such passion in people.”

Finally, the third event in 2023 that StorageGives attended was the Key Ceremony. Local politicians and corporate supporters spoke and welcomed Beberniss and his family to their newly completed home. A flag was raised with Beberniss and his family outside, and the ribbon was finally cut on their new home. The completed home has been adapted for Beberniss and his family, with wide hallways for when he is in his wheelchair, lower counters, and other features to accommodate him and give him his freedom and independence back to help not only himself but his children.

You can support Home For Our Troops year-round by volunteering in upcoming builds in your area. This year the StorageGives team hopes to participate in a future build with the current dates pending. Ray McRae of Storage Solutions said this on volunteering and getting involved in 2024, “I would want people to know that one kind act leads to another; no matter how big or small, you have an opportunity to make a difference. Volunteering gives ordinary people extraordinary opportunities to make a difference. If you want to volunteer, find something you are passionate about and get behind it. Anyone can make a difference; all they have to do is apply themselves.”

Amideo also reflects on the work AZSA and its board members have done with HFOT over the year, saying, “Volunteerism is good for the soul! It was a great experience to bring my oldest son to one of these events. It’s helped him to put things into perspective. He still talks about how he was able to help.”

Home For Our Troops’ core values reaffirm their commitment to the veterans as well as donors, volunteers, and supporters. The Home For Our Troops staff is dedicated to these values: commitment, accountability, respect, excellence, and service. HFOT has a goal of building a specially adapted home for every veteran who qualifies for one of these homes.

Homes For Our Troops is a publicly funded 501(c)(3) nonprofit organization that builds and donates adapted custom homes for severely injured post-9/11 veterans. Many of these veterans have sustained unimaginable injuries, including traumatic brain injury (TBI), limb amputations, and partial or full paralysis. These homes are built in locations that veterans choose, and HFOT continues its relationship with veterans to help them rebuild their lives. Since 2004, Home For Our Troops has built over 371 specially adapted homes nationwide.

Because of the generosity of donors, HFOT enables injured veterans, as well as their caregivers, to rest and recover without the added stress of financial concerns. These custom homes are equipped with over 40 special adaptations that exceed ADA compliance standards. Wider halls and doorways and automatic door openers enable complete wheelchair access and hands-free accessibility when entering or exiting the home. A therapy tub eases the pain of severe injuries, and a safe room provides a place for the family to shelter from severe weather and natural disasters.

For two decades, HFOT has been building adapted homes for injured veterans, continually updating building materials and methods to ensure high quality. Roll under sinks, pull-down stovetops and counters, generators, and safe rooms are designed to help veterans live fulfilling, independent lives. The 2,800-square-foot homes are the perfect size for a veteran to comfortably raise a family, and energy efficiency reins in the utility costs while keeping the homes safe and cozy.

Moving into a donated home enables veterans and their families to plan and save for the future. To ensure long-term success, HFOT provides three years of pro-bono financial planning to all home recipients. After receiving their homes, 57 percent of recipients increased family income and 55 percent decreased family debt. Family savings were increased by 76 percent. Not only do they attend school and obtain employment, but they launch businesses, expand their families, and accomplish life goals and dreams that they never could have imagined without HFOT.

Originally, StorageGives was set to take only a percentage of every unit we hosted on StorageAuctions.com, donating to the eight charities we support. One of the things StorageGives does is feed five kids for every auction unit that ends on StorageAuctions.com. In 2023, we fed over 500,000 children. Facilities can give anything from 10 to 100 percent, but by giving a bit from a lot of units, we can have a larger impact on those charities. After our launch party in November, owners and operators were looking for another way to donate to StorageGives. This prompted us to make direct donations to StorageGives. Upon opening for direct donations, we were enabled to impact our charities now more than ever.

f you have been in the self-storage industry for a while, you know about the Self Storage Association’s two national conferences. First is the SSA Spring Conference & Trade Show, which is a few weeks away, just outside of Washington, D.C., at the Gaylord National Resort and Convention Center. And the second is the SSA Fall Conference & Trade Show in Las Vegas at the MGM Grand in September.

Both events provide access to world-class education and outstanding networking opportunities to our members each year. But did you know that you can access that same level of education and networking locally?

Self-storage state associations hold events throughout the year across the United States. From Lunch & Learns to seminars to conventions and conferences, these state events showcase sessions that are tailored to what is happening locally in the self-storage sector, bringing you a more in-depth look at issues impacting your state and your bottom line. They also include sessions on legislation and advocacy, management, finance, construction, marketing, and technology, just to name a few.

Attending state events can be extremely beneficial for your business in many ways. The opportunity to meet other operators and managers in your state to learn what issues they may be facing or what technology helps them run their business day to day is priceless. They introduce you to legal experts knowledgeable about legislation that might affect your facilities. Learn how you can assist in advocacy efforts by contacting your local and state representatives. The level of education does not decrease at the state level. In fact, it might just be the information you have been looking for.

While our national events are worth every penny, attending a more local event might work better for you financially. Less travel and time away from your facility to get high-level education is a win-win situation. State associations will be hosting their own events throughout the year, but there are also regional events happening in 2024, bringing several states together in a convenient location for education and networking opportunities.

Take advantage of SSA’s educational opportunities right in your backyard! Learn more by visiting selfstorage.org/events-education to view SSA’s 2024 Calendar of Events.

any of us are seeking ways to bring in new revenue, but it’s so important to consider all aspects of those new ideas. Let’s talk about the growing trend of remote property management. One of the key features of remote/unmanned sites is the absence of on-site managers. Instead, they utilize kiosks and have daily, weekly, or on-call staff to ensure smooth operations. These operating practices can result in much lower operating expenses and other operating efficiencies as well.

In the next five years, having on-site staff to handle sales and customer service could be a thing of the past. Being economical and providing good service can be at odds with each other, based on the level of human involvement. As an owner, you know that customers will always have questions. Using technology to provide automatic responses or direct messaging with facility supervisors is one way to address their needs promptly.

While these remote models work well under normal circumstances, a faulty kiosk or a gate that won’t operate can change the game immediately. How can the customer contact you? What’s the response time? How long does it take get the problem fixed? Who will ultimately have to deal with the frustrated, irate customer? Prompt attention and resolution of such incidents become essential to maintain customer satisfaction.

There are other things to think about, such as windstorms, flooding, and common occurrences like damaged gates, burglarized units, and electrical outages, to name a few. These things can happen at any site. Steven Stein, chief executive at SafeLease, says, “A number of factors contribute to a facility’s risk of burglary, such as fencing, lighting, and neighborhood. We find that remote operations per se doesn’t contribute to burglary as much as amplify existing risk factors.” Ashley Earick, general manager of Claimspros.com, says, “It is far easier to negotiate a settlement with a customer who has been communicated with in a timely manner, which also gives us a chance to possibly make a quicker, lower payout. The reverse is true with this, who are already mad at the lack communication regarding their claim.”

Did you know that most physicians connected to multiple medical malpractice incidents all shared similar characteristics? Patients sue unempathetic doctors who don’t communicate openly and aren’t responsive/available. Earick adds, “Side by side, claims submitted from remote or unmanned sites are higher and there are more occurrences compared with the traditional storage locations we handle claims for.”

While remote/unmanned models work well under most circumstances, prompt attention to and the resolution of any incident become essential for maintaining your reputation and, more importantly, customer satisfaction.